Imperial Fund Mortgage plans to raise $ 237 million



Imperial Fund Mortgage Trust 2021-NQM2 is preparing to issue about $ 237.4 million in end-to-end mortgage certificates to continue financing mortgage loans to a range of borrowers, including those financing investment purchases.

Imperial Fund II, LLC is sponsoring the deal, which is secured by loans from A&D Mortgage, LLC under six lending programs. According to DBRS Morningstar, A&D provided loans primarily through the ability to repay (ATR) rules enforced by the Consumer Financial Protection Bureau (CFPB), which covers self-employed, first-class and first-class borrowers, and even foreign nationals.

Citibank acts as the administrator and registrar of certificates for the transaction. The capital structure of the senior subordinate requires the proportionate distribution of the principal among the senior tranches. The DBRS also notes that for grades A-1 through B-1, the trust may also use the excess spread to cover realized losses and write off the write-off on prior period bonds before it is allocated to unpaid carry-over amounts.

A&D Mortgage will act as the handler for the transaction and Nationstar Mortgage will take over the role of the main handler.

Among the strengths of the collateral pool is the weighted average (WA) initial combined loan-to-value (LTV) ratio of 69.6%, indicating that borrowers have significant amounts of equity in their homes. In addition, about 66% of mortgages were granted in accordance with the eight underwriting factors of the ATR rules. According to the DBRS, at the cut-off date for loan aggregation, 100% of the pool was current.

In terms of general characteristics of core loans, fixed rate mortgages make up 95.9% of the pool, while variable rate hybrid mortgages make up only 4.1%.

The DBRS noted that underwriting standards have improved significantly since the pre-crisis era, especially with regard to verification of income, assets and employment, as well as valuation and reserve requirements. For example, complete documentation for proof of income requires the borrower to submit one to two years ‘W-2 statements, two months’ asset statements, as well as verbal proof of employment, and other requirements.

If borrowers plan to use bank statements to verify income, then usually one of the borrowers must be self-employed. In addition, the borrower must provide statements from a personal or commercial bank for 12 or 24 months.
DBRS plans to assign the bonds of grade A-1, grade A-2 and grade A-3 respectively “AAA”, “AA” and “A” ratings. The M-1 mezzanine class should be rated ‘BBB’, while the B-1 and B-2 classes can be rated ‘BB’ and ‘B’ respectively.


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